Although the investment instrument in question might be nothing more special or specific than a high-interest savings account, we still save for very specific goals. While I think that this does constitute effective financial planning, it also leaves out one crucial component: opportunity.

Prioritize

Many of us would know of an opportunity account as a rainy-day account. But how many of us have one of these accounts, much less make it a priority? Pursuant to general financial discipline and psychology, if we don’t make it a priority, the money tends to get spent elsewhere.

If we want something badly enough, then we tend to do what needs to be done to make it happen. I was chatting with an old friend who had her first child three years ago. When discussing if there would be more, she said “oh yeah, we’ll probably have another one. I worry about whether we can afford it, but since we didn’t think we had the money for the first one, I figure we’ll make it work the second time around too!”

For her, letting money get in the way of having another child is not an option. She realizes that once the priority of having kids is set, the other building blocks in her financial house will fall into place.

Such is the case with any financial goal. We tend to find money where we need to, by reducing our expenses elsewhere. Nothing gets us off those lattes better than a passion and purpose-driven goal.

Lump Sum Opportunities, and Going into Debt for Them

But if we still don’t plan for these unpredictable opportunities, we may miss out on our chance. Having children involves a long-term increase in expenditures. But what if the opportunity that falls in our lap involves a lump sum? However large or small this lump sum is, it is rarely smart to rely on debt instruments like credit cards to be our opportunity fall-back. This is how people get into trouble.

Why? Because although we can find a way to save for opportunity, if we have already spent the money and now have to re-pay it, we will lose sight of why we got into debt to begin with. By using a debt instrument as our opportunity account, the following can happen:

Opportunities that go Sour

A friend of mine put a large opportunity purchase on her credit card. The purchase was both entirely justified as an opportunity and would improve her quality of life drastically. She even had extra income potential by virtue of making this purchase. If she had an opportunity account and used that money for this purchase, I have no doubt that her lifestyle, income, health, and finances would have been transformed by now.

But sadly, this is not what happened. Instead, because of the stress of paying the purchase off (in addition to other similar debts she was still trying to pay off), she felt she was drowning. Every time she looked at the purchase in question, she was reminded of her debt load, and it often led to panic attacks. She ended up re-selling the item for way less than she paid for it; it was a true loss in every sense of the word. Why? Because she’s still paying it off, and has absolutely nothing but grief to show for it.

Staying Motivated

It may be difficult – at first – to be passionate about an opportunity account. After all, if we don’t know what we are specifically saving for, it is tricky to stay motivated. But if we automate the process and save into an opportunity account just as we would for your other purpose-driven goals, we take the human element out of it, and we simply find a way to live with the money we have left over.

The monthly amount going into the opportunity account might not be massive, especially if our income is variable. And that’s okay; Rome wasn’t built in a day. Little by little, our opportunity account will grow and eventually – the opportunities will seem endless.

Here is how opportunity accounts have helped me:

I got my full skydiving license and gear, and enjoyed multiple skydiving-related trips, training, and competitions

I pursued my life-long passion of performing as an actor/singer/dancer and had the money to float my expenses during this low-income period

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I actually have what I refer to as my "Sunny Day Fund," which is just about identical to an "Opportunity Fund." It's extra money set aside in a savings account... Doesn't really have a definite purpose, it's just there to be spent on whatever I decide is an appropriate use for the funds. So far, it's only things that are really really important to me... A great rare item for a collection, more tattoos, supplementing another fund, etc.

I also have a "Travel Fund" that doubles as an "Opportunity Fund." Just this past week we used some of it to provide the funds to buy a used set of wheels a friend of a friend is selling for our project car. It's a good deal, and having the cash on hand to pounce on the opportunity was great! (Of course, money gets paid back ASAP, but it's great to have funds to draw on when necessary.)